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Gold Prices in the Balance if Yields, US Dollar Diverge Again

Gold Prices in the Balance if Yields, US Dollar Diverge Again

Ilya Spivak, Head Strategist, APAC

GOLD & CRUDE OIL TALKING POINTS:

  • Gold prices pull back as the US Dollar finds haven demand
  • Further USD gains may counter support from falling yields
  • Crude oil eyes EIA outlook, API inventory data for direction

Gold prices retreated after hitting the highest level since mid-July as the US Dollar recovered, undermining the appeal of anti-fiat alternatives. What began as a tepid recovery after APAC markets took their turn pricing in Friday’s disappointing US payrolls data gathered steam as stocks plunged on Wall Street, speaking to the Greenback’s haven appeal.

Sentiment trends may continue to drive price action in the day ahead. Futures tracking the bellwether S&P 500 index are pointing lower, hinting that a risk-off bias may translate into weaker bond yields and offer support for the yellow metal. Gains may be capped if the Dollar continues to benefit from safety-seeking capital flows however.

CRUDE OIL PRICES EYE API INVENTORY DATA, EIA OUTLOOK

Crude oil prices edged down but remained confirmed within a range hemming them in for the past two weeks. From here, the EIA Short-Term Energy Outlook report and API inventory flow data is on tap. The former may reiterate the point that swelling US output threatens to undermine OPEC+ efforts to boost prices. The latter will be sized up against forecast envisioning a 2.75 million barrel outflow.

Learn what other traders’ gold buy/sell decisions say about the price trend!

GOLD TECHNICAL ANALYSIS

Gold prices corrected lower to retest resistance-turned-support in the 1235.24-41.64 area. A break back below it on a daily closing basis exposes a support cluster with a lower boundary marked by a rising trend line at 1208.06. Resistance runs through a chart inflection zone as well as former trend support set form December 2015. That is now capped at 1272.71.

Gold Daily Chart

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to mark time between resistance at 53.33 (former support, falling trend line) and support at 49.16, the October 9, 2017 low. A break downward exposes the August 31, 2017 bottom at 45.62. Alternatively, a push above the range top opens the door for a retest of support-turned-resistance at 55.24.

Crude Oil Chart (Daily)

COMMODITY TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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